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How to calculate income tax in India

October 30, 2018 1695
An income tax in India is a tax that governments impose on income generated by businesses and individuals within their jurisdiction. An income tax is defined as a tax imposed on individuals that varies with respective income or profits (referred to as taxable income). Income tax generally is computed as the product of a income tax rate and the taxable income. By law, taxpayers must file an income tax return annually to determine their tax obligations. Income taxes are a source of revenue for governments. Credits of various sorts may be allowed that reduce tax. Some jurisdictions impose the higher of an income tax or a tax on an alternative base or measure of income. These taxes are used to fund public services, pay government obligations etc.

In order to calculate the exact amount of income tax that you must pay, note down your exact taxable income. The final payable tax is calculated by applying the tax rates and then deducting the amount that has already been paid through TDS (Tax Deducted at Source) and other forms of advance tax. Use tax saving calculator, if you want to know the amount you may save form tax.

In India, income tax is levied on individual taxpayers on the basis of a slab system. These tax rates have been prescribed for different slabs and such tax rates keep increasing with an increase in the income slab. The tax slabs tend to undergo a change during every budget. Further, since the budget of 2018 has not announced any changes in income tax slabs this time, it remains the same as that of last year.

There are three categories of individual taxpayers:

1. Individuals (below the age of 60 years) which includes residents as well as non-residents 2. Resident Senior citizens (60 years and above but below 80 years of age)

3. Resident Super senior citizens (above 80 years of age)

Income Tax Slab and Rates for Financial Year 2018-19 are as mentioned below:

  • No tax for individuals with income less than ₹ 2,50,000
  • 0%-5% tax with income  ₹ 2.5 lacs to 5 lacs for different age groups
  • 20% tax with income  ₹  5 lacs to 10 lacs
  • Investments up to  ₹ 1.5 lacs under Section 80C can save  ₹ 45,000 in taxes.

The detailed slab for people under the age of 60 is as follows:

Income Tax Slabs

Tax Rate

Health and Education Cess

Income up to Rs 2,50,000*

No tax

 

Income from Rs 2,50,000 - Rs 5,00,000

5%

4% of Income Tax

Income from Rs 5,00,000 - Rs 10,00,000

20%

4% of Income Tax

Income more than Rs 10,00,000

30%

4% of Income Tax

 

For persons above the age of 60, the slab is as follows:

Income Tax Slabs

Tax Rate

Health and Education Cess

Income up to Rs 3,00,000*

No tax

 

Income from Rs 3,00,000 - Rs 5,00,000

5%

4% of Income Tax

Income from Rs 5,00,000 - 10,00,000

20%

4% of Income Tax

Income more than Rs 10,00,000

30%

4% of Income Tax

 

For persons above the age of 80 (i.e. super senior citizens), the slab is as follows:

Income Tax Slabs

Tax Rate

Health and Education Cess

Income up to Rs 5,00,000*

No tax

 

Income from Rs 5,00,000 - 10,00,000

20%

4% of Income Tax

Income more than Rs 10,00,000

30%

4% of Income Tax

HDFC Life offers several saving and investment plans that allow you to maintain security of the finances and offer market-linked returns and capital benefits. For details, click on the mentioned link: https://www.hdfclife.com/savings-investment-plans

Income Tax calculator

 

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